Asian refiners are seeking alternative routes to ship crude oil from Saudi Arabia's Red Sea port of Yanbu through the Suez Canal and around Africa following threats of a naval blockade by Yemen's Iran-aligned Houthis.

This shift comes amid the ongoing U.S.-Israeli war with Iran, which has sharply reduced oil supplies and forced refiners to find alternative barrels or routes. Two oil tankers carrying Saudi crude to Asia reversed course in the Red Sea on Tuesday, July 21, after Houthi threats, while vessel crossings via the Strait of Hormuz also declined earlier in the week.

Shipping westward from Yanbu toward Egypt, passing through the Suez Canal, and rounding the Cape of Good Hope will add up to four weeks to transit times and increase freight and fuel costs compared to the usual eastward route to the Arabian Sea, analysts and industry experts warn.

Ship-tracking data showed the Liberia-flagged vessel Rodos, loaded with crude at Yanbu and bound for India's west coast, was rerouted west toward the Suez Canal. South Korean refiner Hyundai Oilbank sought a Very Large Crude Carrier (VLCC) at Yanbu with the option to use the Suez Canal and Egypt's SUMED pipeline, which connects the Red Sea and Mediterranean Sea, to transport oil to South Korea.

Due to draft limits, fully loaded VLCCs cannot pass through the Suez Canal. Shippers often lighten these vessels on the Red Sea side by transferring some oil into the SUMED pipeline, then reload on the Mediterranean side after transit.

Charterers may use the SUMED pipeline and Suez Canal at their discretion or if the Bab el-Mandeb Strait, the southern gateway to the Red Sea, becomes fully blocked.

"Changing behavior by tankers tells us that they are taking the threats seriously," said Matt Smith, commodity research director at Kpler.

Sources